United States Kansascity Southern Ry Co v. Interstate Commerce Commission

• Decision Date: 08 March 1920
• Docket Number: No. 413,413
• Citation: 40 S.Ct. 187,252 U.S. 178,64 L.Ed. 517
• Parties: UNITED STATES ex rel. KANSASCITY SOUTHERN RY. CO. v. INTERSTATE COMMERCE COMMISSION
• Court: U.S. Supreme Court

252 U.S. 178

40 S.Ct. 187

64 L.Ed. 517

UNITED STATES ex rel. KANSASCITY SOUTHERN RY. CO.

v INTERSTATE COMMERCE COMMISSION.

No. 413.

Argued December 10, 1919.

Decided March 8, 1920.

Messrs. Louis Marshall, of New York City, Samuel W. Moore, of Kansas City, Mo., and Frank W. Swacker, of Washington, D. C., for plaintiff in error.

Mr. Patrick J. Farrell, of Washington, D. C., for defendant in error.

[Argument of Counsel from pages 179-182 intentionally omitted] Mr. Chief Justice WHITE delivered the opinion of the Court.

The Act of Congress of March 1, 1913 (37 Stat. 701), amending the 'Act to Regulate Commerce,' imposed the duty upon the Interstate Commerce Commission (section 19a [Comp. St. § 8591]) to 'investigate, ascertain, and report the value of all the property owned or used by every common carrier subject to the provisions of this act.' Specifying the steps to be taken in the performance of the general duties thus imposed, the same section commanded as follows:

'First. In such investigation said Commission shall ascertain and report in detail as to each piece of property owned or used by said carrier for its purposes as a common carrier, * * * the cost of reproduction new, the cost of reproduction less depreciation, and an analysis of the methods by which these several costs are obtained, and the reason for their differences, if any. * * *

'Second. Such investigation and report shall state in detail and separately from improvements the original cost of all lands, rights of way, and terminals owned or used for the purposes of a common carrier, and ascertained as of the time of dedication to public use, and the present value of the same, and separately the original and present cost of condemnation and damages or of purchase in excess of such original cost or present value. * * *

'Fifth * * * [seventh paragraph]. Whenever the Commission shall have completed the tentative valuation of the property of any common carrier, as herein directed, and before such valuation shall become final, the Commission shall give notice by registered letter to the said carrier, * * * stating the valuation placed upon the several classes of property of said carrier, and shall allow thirty days in which to file a protest of the same with the Commission. * * *

'If notice of protest is filed the Commission shall fix a time for hearing the same, and shall proceed as promptly as may be to hear and consider any matter relative and material thereto. * * * All final valuations by the commission and the classification thereof shall be published and shall be prima facie evidence of the value of the property in all proceedings under the Act to Regulate Commerce as of the date of the fixing thereof, and in all judicial proceedings for the enforcement of the act approved February 4, 1887, commonly known as 'the Act to Regulate Commerce,' and the various acts amendatory thereof, and in all judicial proceedings brought to enjoin, set aside, annul or suspend, in whole or in part, any order of the Interstate Commerce Commission.'

Pursuant to these requirements the Commission proceeded to investigate and report the value of the property of the Kansas City Southern Railway Company. Upon completing a tentative valuation, the Commission gave the notice required by the statute to the railway company, which thereupon filed a protest against such valuation on the ground that in making it the Commission had failed to consider and include the 'present cost of condemnation and damages or of purchase in excess of such original cost or present value.' Upon the subject of the protest, the railway company took a large amount of testimony and much was also taken by the Commission, both parties having incurred considerable expense in the matter.

Pending this situation, in order that the excessive expense of taking each individual parcel and showing what it would cost to acquire it or a right of way over it by purchase or condemnation might be avoided, an agreement was entered into between the Director of the Bureau of Valuation of the Commission, C. A. Prouty, and the railway company, that in the event the Commission should decide that evidence upon the cost of acquiring land by purchase or condemnation would be received by it, the Bureau of Valuation would recommend to the Commission the percentage or multiplier of the naked value of the land, to be used for the purpose of reaching the railway cost of acquiring the same.

At that time there was also pending a protest concerning a tentative valuation made by the Commission as to the property of the Texas Midland Railroad Company, raising the same question as to error committed in failing to carry out the provisions of the statute concerning the present cost of condemnation, etc., in which case the Commission overruled the protest, holding that the provision of the statute in question was not susceptible of being enforced or acted upon for reasons stated by the Commission in part as follows (I. C. C. Val. Rep. 1, p. 54 et seq.):

'However, the direction in paragraph 'Second' for the ascertainment of the present cost of condemnation and damages or of purchase in effect calls for a finding as to the cost of reproduction of these lands. Must this be done, and can this be done? It seems elementary that the cost of reproduction can be estimated only by assuming that the thing in question is to be produced again, and that if it is to be...